Anran
July 11, 2019
Shandong Anran Nano Industrial Development Co. (Anran Nano), the Weihai-based company that holds Chinese direct selling license No. 32, has been named as defendant in a civil suit in which a former product seller asks the Huancui District People's Court in Weihai to declare his sales relationship with the company void, alleging that its business model amounts to illegal pyramid selling dressed up as licensed direct selling.
The case, docketed as (2019) Lu 1002 Min Chu No. 978 and filed on February 20, 2019, is one of several similar contract invalidity suits against Anran Nano that surfaced in Chinese court records in July 2019. The plaintiff said he joined as a seller through Diamond International, the largest distributor organization selling Anran products, and paid fees without ever receiving a sales contract, training, an exam or a direct seller certificate as required by China's direct selling regulations.
The complaint also alleges that training was run by unlicensed Diamond International lecturers who charged admission, and that the pay plan rewarded uplines on the sales of their downlines far beyond the 30 percent cap on a seller's own retail sales set by the regulations. As an example it cited Diamond International founder Zhang Zhijun, who it said earned 50 million yuan in 2018 with almost no personal retail sales. The plaintiff argued this team-based compensation fits the definition of pyramid selling under China's Regulations on Prohibition of Pyramid Selling.
The document on record is a civil ruling, and its outcome was not disclosed in public reporting. Anran Nano did not respond to press inquiries about the cases. Separately, market regulators in Hangzhou said in mid-2019 they were investigating an Anran product showroom and a related consultancy, noting that Anran was not approved to conduct direct selling in Zhejiang province. Anran Nano was founded in 2004; its legal representative is chairman Liu Rundong.